The Human Resources Committee of the Board (the Committee) is responsible for establishing and administering all policies and plans related to compensation and benefits for the senior management group, including the executives listed in the Summary Compensation Table (the named executive officers) which begins on page 30 of this Proxy Statement. Verizon’s Corporate Governance Guidelines provide that each member of the Committee is a non-management director who the Board has determined is independent under applicable laws and regulations, the listing standards of the New York Stock Exchange, and the Corporate Governance Guidelines. In addition, each of the four members of the Committee has considerable experience in overseeing compensation and benefits matters and developing executive compensation programs.

The Committee has the direct responsibility for evaluating the performance of the senior management group and approves each component of senior management compensation, including all of the policies and plans under which executive compensation is paid or awarded. With respect to the Chief Executive Officer, the Committee presents its evaluation and recommendations to the independent members of the Board for their approval. The Committee retains the services of an outside consultant to assist it in performing its duties (the HRC Consultant). The HRC Consultant is engaged by, and reports directly to, the Committee. The HRC Consultant generally attends all meetings of the Committee. Following each Committee meeting, the Committee reports to the Board of Directors on its actions and recommendations and the Committee periodically meets in executive session without members of management present. Although the Committee receives recommendations from the Executive Vice President of Human Resources and from the HRC Consultant regarding the design and level of compensation to be provided to Verizon’s named executive officers, the Committee ultimately makes all final decisions as to the compensation levels for these executives. The Committee believes that an appropriate level of input from management and input from the HRC Consultant provide a necessary and valuable perspective in helping the Committee formulate its own independent views on compensation.

This report summarizes the objectives, structure, and compensation levels of the Company’s executive compensation programs for 2005.

OVERVIEW
The Committee oversees a compensation program that is designed to support Verizon’s long-term strategy and align the financial interests of the senior management group with the interests of Verizon’s shareholders. To further these goals, the Committee has established the following objectives for the Company’s executive compensation program:

• Provide a compensation program that is competitive with the compensation practices of those peer companies with which Verizon competes for talent;
• Motivate performance by tying a substantial portion of an executive’s compensation to Verizon’s achievement of pre-established financial objectives, and in the case of the Chief Executive Officer, certain strategic objectives, and reward individual executives who achieve those goals and enable the Company to achieve returns for shareholders; and
• Align the interests of Verizon’s executives to those of Verizon’s shareholders and provide incentives that promote the retention of talented executives.

The Committee evaluates and approves each component of compensation (base salary, annual incentive bonus, long-term incentives and other benefits) and the individual total compensation for the senior management group. Each year the Committee benchmarks the ongoing competitiveness of these plans and programs to assess whether they are achieving the desired goals and objectives. In considering the mix of elements comprising total compensation, the Committee emphasizes long-term pay and performance to emphasize the importance of achieving Verizon’s long-term goals. The Committee does not take into account gains or losses from prior stock option grants or other stock based awards in setting the elements of compensation or retirement benefits. For competitive reasons and based on market data, the Committee believes that compensation should be primarily evaluated each year rather than over the span of an individual’s career.

Verizon’s 2005 annual and long-term incentive compensation plans are designed to reward individual, business unit and company achievements. The plans provide aggressive performance objectives that serve to both motivate executives to achieve higher levels of results and to retain executive talent in order to provide continuity so that the executives can focus on their duties of executing the Verizon business plan, provide superior service to Verizon’s customers and grow the business for Verizon’s shareholders. The Verizon Short-Term Incentive Plan rewards the achievement of financial, operational and other business goals. The Plan differentiates among Verizon’s main business units of corporate, wireless, domestic telecom, international and information services. Employees of a particular business unit receive payouts according to that business unit’s performance. The Verizon Long-Term Incentive Plan rewards the creation of shareholder value and aligns the long-term interests of the Company’s senior management group with those of its shareholders. The Committee recognizes the need for capital investments in Verizon’s core businesses in order to sustain long-term growth and profits. For 2005, the Committee determined that the senior management group’s long-term incentive compensation should consist of two different types of stock units: (1) performance stock units (PSUs), which vest only to the extent certain performance targets are met; and, for executives other than the Chief Executive Officer, (2) time based restricted stock units (RSUs), which vest over time only if an individual remains continuously employed by Verizon for the entire award cycle. The time based restricted stock units will also vest if an individual retires after the first six months of the award cycle, terminates employment as a result of death or disability or is involuntary terminated without cause at any time during the award cycle; provided that the participant executes a release satisfactory to the Company upon his or her separation from employment. All PSUs and RSUs will be immediately cancelled if a participant retires during the first six months of the award cycle, voluntarily terminates his or her employment or is terminated for cause at any time during the award cycle. The Committee has set the total compensation of Verizon’s senior management group at levels that are intended to be competitive with market peers, i.e., other large, global, public companies with whom Verizon competes for executive talent. The Committee also benchmarks total direct compensation (base salary, annual and long-term incentive awards) against an industry peer group of telecommunications, broadband, wireless and cable companies. The Committee has determined that the aggregate of Verizon’s base pay and short-term compensation opportunity should target the median for market and industry peers and that its long-term incentive opportunity should target the third quartile. With the assistance of the HRC Consultant, the Committee annually compares Verizon’s total direct compensation and component pay levels to those of its market and industry peer group companies in order to ensure competitiveness.

ELEMENTS OF EXECUTIVE COMPENSATION
The key elements of the executive compensation structure for the senior management group are base salary, a short-term incentive award paid in cash and a long-term incentive award, each of which is discussed below. In addition, the named executive officers are also eligible for certain other benefits that are described in more detail below.

Base Salary. The Company’s executive salary structure is based on broad salary bands that take into consideration the executive’s duties, performance and experience. Salary adjustments, if any, are based on a review of competitive market data relative to the Company’s market and industry peer group companies and individual performance. In 2005, the senior management group received salary increases based upon individual performance, market changes in the value of positions, and the economic and business conditions affecting Verizon at the time of the evaluation. The salaries earned by the named executive officers for 2005 are shown in column (c) of the Summary Compensation Table on page 30.

Short-Term Incentive. The Verizon Short-Term Incentive Plan places a sizable percentage of annual cash compensation at risk. Short-term incentives strengthen the link between the senior management group and the Verizon business strategy, and underscore the focus on superior performance and results. The Short-Term Incentive Plan requires that Verizon achieve at least an 8% return on equity before any awards are made under the Plan.

The targeted value of the short-term incentive award is generally based on a percentage of the recipient’s actual base salary. The Committee approves the appropriate percentage for each of the band levels in the senior management group, based on the scope of responsibility of a senior manager and the competitive pay practices of Verizon’s market peer group companies. The target awards for the named executive officers range from 75% of salary to 125% of salary (for the Chief Executive Officer). Depending on Verizon’s and the individual’s performance, the awards can range from zero to two times the targeted award value. When the Company’s performance meets the pre-established performance objectives, employees generally receive short-term incentive payouts at one and a half times their targeted levels. When the Company’s performance is better than the pre-established performance objectives, employees generally receive payouts of up to a maximum of two times the targeted level. Correspondingly, when the Company’s performance does not meet the pre-established performance objectives, employees generally receive payouts lower than one and a half times the targeted levels, down to zero. For 2005, the Committee evaluated Verizon’s performance with respect to earnings per share and revenue (excluding the net impact of pension and post-retirement benefits) against the performance of industry peers. In addition, the Committee based a portion of the award upon two non-financial measures: customer service and diversity. Based on Verizon’s strong 2005 financial results in these areas as driven by continued wireless, broadband, data and long-distance revenue growth, solid cash flow and solid margins, and continued industry leadership in customer service and diversity, the Committee approved a performance percentage payout for each main business unit according to that business unit’s contribution to the Company’s overall performance. The amounts shown under “Bonus” in column (d) of the Summary Compensation Table represent the short-term incentive payments awarded to each of the named executive officers for 2005.

Long-Term Incentive. The Verizon Long-Term Incentive Plan is designed to reward the creation of shareholder value and align the financial interests of the senior management group with the interests of Verizon’s shareholders.

The Committee adjusted the long-term incentive target values of the 2005 long-term incentive awards for Verizon’s senior management group, the first adjustment since 2000, to reflect the levels that are competitive with Verizon’s market peer group companies and to better balance senior managers’ compensation between at risk performance-based pay and guaranteed income.

The Company’s Long-Term Incentive Plan permits the award of non-qualified stock options, incentive stock options, performance stock units, restricted stock units and stock appreciation rights which are paid depending on performance over a specified period. In 2005, the senior management group, including the named executive officers, received long-term incentive compensation that consisted of 60% performance stock units and 40% restricted stock units. This mix of equity links the executive’s potential payout to Verizon’s financial results and stock performance over a three-year cycle and provides the opportunity for greater payouts only to the extent that there has been a relative increase in shareholder value over the three-year performance period. The Committee believes that this award opportunity closely aligns the interests of the Company’s senior management group with the interests of its shareholders because payment is based on external performance measures, stock price and relative total shareholder return, and, in the case of Mr. Seidenberg’s award, certain additional strategic performance objectives as discussed below. The amount of the long-term incentive award granted to a particular employee is generally based on the recipient’s actual base salary multiplied by a percentage applicable to the recipient’s compensation band, the scope of responsibility of a particular job and the competitive pay practices of Verizon’s market peer group companies for similar positions.

In 2005, 60% of an executive’s long-term incentive compensation opportunity, and 100% of the Chief Executive Officer’s long-term incentive compensation opportunity, was granted in the form of performance stock units. Performance stock units represent shares of Verizon stock that may become payable in cash after the completion of a three-year performance cycle. Actual payment of the performance stock units will be determined based on Verizon’s Total Shareholder Return (TSR) relative to the TSR of the companies that make up the Standard & Poor’s 500 and to the TSR of certain companies in Verizon’s telecommunications, broadband, wireless and cable industry peer group. TSR is determined by stock price appreciation plus dividends reinvested. No performance stock units will be paid unless Verizon’s relative TSR position meets a specific minimum threshold percentage at the conclusion of the three-year performance cycle. The total percentage of PSUs that are ultimately payable to a participant is based upon a weighted average equal to 40% of Verizon’s relative TSR position compared to the Standard & Poor’s 500 companies and 60% of Verizon’s relative TSR position compared to Verizon’s industry peer group companies. The following table illustrates the PSU payout percentage for 2005 based upon Verizon’s relative TSR position, as compared to the Standard & Poor’s 500 companies and the companies in Verizon’s industry peer group, over the three-year performance period.

In 2005, for managers other than the Chief Executive Officer, 40% of an employee’s long-term incentive compensation opportunity was granted in the form of time based restricted stock units. Restricted stock units represent shares of Verizon stock that will become payable in cash approximately 3 years after the date of grant. The value of each restricted stock unit is equal to the fair market value of a share of Verizon’s common stock on the date of grant and will change as the value of Verizon’s common stock changes. This mix of equity awards aligns with market practice and prevents unwanted dilution through a more conservative approach to allocating shares. Moreover, restricted stock units provide retentive value by increasing stock ownership in the company through which the value can be enhanced by superior share performance. This further aligns the interests of senior management with the long-term interests of the Company’s shareholders.

The value of the performance stock units and restricted stock units granted to each of the named executive officers is shown in column (f) of the Summary Compensation Table.

Other Benefits. Verizon also provides its executives with the other benefits that are described below and that are intended to be part of a competitive overall compensation program.

Company Transportation. The Committee requires Messrs. Seidenberg, Babbio and Strigl to use aircraft maintained by Verizon for business use as well as personal travel, for security purposes. The Committee believes that this also enables more efficient use of their travel time. Mr. Barr and Ms. Toben are permitted to use the corporate aircraft for personal use on a limited basis. Verizon also provides a driver and Company owned car to Mr. Seidenberg and certain other named executive officers are permitted to use a driver and Company owned car for limited personal use, primarily involving commuting to work and traveling to and from business meetings. Information concerning the incremental costs for the use of Company provided transportation by Mr. Seidenberg and the other named executive officers is set forth in the Summary Compensation Table and related notes beginning on page 30.

Company Housing. Based on a past agreement, Mr. Babbio had periodic use of a Company owned apartment during 2005 for business and personal reasons. Neither Mr. Babbio nor any other named executive officer will have use of a Company owned apartment in 2006. Information concerning the incremental costs for the use of this Company owned apartment is set forth in the Summary Compensation Table and related notes beginning on page 30.

Executive Life Insurance. Verizon currently provides executive life insurance policies to its senior management employees, including the named executive officers, on a voluntary basis. These policies are designed to provide a death benefit equal to five times an executive’s eligible compensation if such executive were to die while an active Verizon employee. If an executive continues the policy after retiring from Verizon, the death benefit is reduced to two times an executive’s eligible compensation. The policies are owned entirely by the Verizon executive and Verizon pays each executive a bonus to cover the partial cost of maintaining such policy. All senior management employees, including the named executive officers, are excluded from participation in Verizon’s basic and supplemental life insurance programs if they choose to participate in the executive life insurance program. The amount of each bonus paid to the named executive officers to cover the partial cost of the executive life insurance plan is set forth in the Summary Compensation Table and related notes beginning on page 30.

Financial Planning. Verizon provides financial planning benefits to the entire senior management group, including the named executive officers. Part of the cost associated with the financial planning services used by each executive is imputed to such executive as ordinary income for the year in which the cost was incurred. The amount of the cost of the financial planning services paid to each of the named executive officers is set forth in the Summary Compensation Table and related notes beginning on page 30.

SUMMARY OF EXECUTIVE COMPENSATION CHANGES FOR 2006
As previously reported, the Committee approved freezing the accrual of future benefits under the Verizon Income Deferral Plan and eliminated the 32% retirement contribution credit on eligible compensation, as of the close of business on December 31, 2004. Only senior managers were eligible to participate in this plan. Beginning on January 1, 2005, executive officers and other senior managers began receiving the same benefits as described below as other employees under the Verizon Excess Pension Plan (VEPP). More specifically, the executive officers and other senior managers became eligible to receive retirement pay credits equal to 4%-7% (depending on age and service) under the VEPP, on all eligible compensation that exceeds the IRS qualified pay limits ($210,000 in 2005). This is the same pay-credit percentage range received by all other management employees who participate in the VEPP. This action reduced the future pension credits received by Verizon executive officers and other senior managers from 32% to a range of 4%-7%.

At the end of 2005, the Company announced the restructuring of retirement benefits for all management employees. This change does not impact current retirees. The restructuring is designed to align retirement benefits for management employees and to provide Verizon with a more affordable benefit cost structure so that it can more effectively compete with companies that do not provide defined benefit pension plans or subsidized retiree medical benefits. In implementing this change the Company announced that it will provide employees with an enhanced savings plan opportunity that is more in line with current trends and will allow employees to have greater responsibility in managing their own finances.

Accordingly, effective July 1, 2006, all Verizon management employees will no longer earn pension benefits under the Verizon Management Pension Plan and the VEPP. For management employees earning pension benefits as of June 30, 2006, the Company will fully vest their pension benefit and will enhance the pension benefit earned as of that date by adding 18 months of additional cash balance pay credits to pension accounts and, if applicable, 18 months of service to the highest average pay formula pension calculation. Management employees hired after January 2006 are not eligible for pension benefits under the Verizon Management Pension Plan or the VEPP. In addition, Verizon management employees who have at least 15 years of service (including the additional 18 months) or who are age 65 with at least 5 years of service (including the additional 18 months) as of June 30, 2006, and who become eligible for company subsidized retiree medical coverage (without taking the additional 18 months of service credit into account), will have their company subsidy toward retiree medical benefits calculated based on service through June 30, 2006 plus an additional 18 months. Verizon management employees will not earn service toward the company retiree medical subsidy after June 30, 2006. Verizon management employees who do not have 15 years of service with the additional 18 months of service added as of June 30, 2006 will not have any company subsidy for retiree healthcare or life insurance. However, these Verizon management employees will be able to purchase retiree healthcare and life insurance through Verizon at their own expense once they are retirement eligible.

Beginning July 1, 2006, the Company will provide management employees with an enhanced savings opportunity under the qualified savings plan. Verizon will provide a matching contribution equal to 100% of the first 6% of eligible compensation deferred or contributed to the savings plan. In addition, in order to shift to an even greater performance driven benefits and compensation structure, management employees will be eligible for an additional performance related matching contribution of up to 3% of eligible compensation if the Company meets certain performance criteria.

For management employees whose eligible compensation exceeds the IRS compensation limits, Verizon will provide the same matching contributions on eligible compensation exceeding the IRS compensation limits under a nonqualified savings plan.

2005 COMPENSATION FOR THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
The Committee meets each year in executive session with the other independent Directors to evaluate the performance of Ivan Seidenberg as Chairman and Chief Executive Officer of Verizon. The results of the evaluation are considered in determining his compensation, consistent with the compensation policies described above. The Committee also consults with the HRC Consultant in setting Mr. Seidenberg’s compensation. The level of Mr. Seidenberg’s 2005 compensation was determined in accordance with the policies and practices discussed in this report.

In January 2005, the independent members of the Board of Directors approved a change in the structure of Mr. Seidenberg’s compensation, after considering the increasing competition in the telecommunications industry, Verizon’s comprehensive business strategy, and shareholder interests in Verizon’s continued success. The independent members of the Board approved the first increase in five years to Mr. Seidenberg’s salary, reflecting the Company’s success in creating growth and building market share in a highly competitive environment and to align his base salary to the base salary level of his market peers. Mr. Seidenberg’s salary increased $600,000, from $1,500,000 to $2,100,000. His 2005 salary was determined based on his individual performance in 2004, changes in the market value of comparable positions since 2000, and the economic and business conditions affecting Verizon. His 2005 base salary is in alignment with the base salary levels of other chief executive officers at other large global public companies comparable to Verizon. His annual salary is shown in column (c) of the Summary Compensation Table, and his short-term incentive award is shown under “Bonus” in column (d) of this table.

In 2005, under Mr. Seidenberg’s leadership, the Company delivered strong financial and operational performance as the Company continued to grow its customer base through innovative products in wireless, broadband, data, video, and long-distance services. In addition, Verizon continued to make significant investments in updating its network and infrastructure in order to effectively compete for customers in the fast paced telecommunications environment. The Company continues to demonstrate its ability to grow and build market share in a highly competitive industry. Verizon’s annual consolidated operating revenues increased 6.0%, driven by 16.8% revenue growth at Verizon Wireless and by 10.5% revenue growth in wireline data revenues. Also, in 2005, Verizon announced the proposed acquisition of MCI, a transaction that will strengthen the Company and enhance its ability to more fully serve the growing large business, government and enterprise customer groups.

For 2005, Mr. Seidenberg was eligible for a maximum short-term incentive award equal to 2.5 times his annual base salary. He received an award of $4,147,500 based on the factors discussed above. In 2005, Verizon continued to introduce innovations in wireless, broadband, data, video and long-distance services resulting in strong growth. Verizon’s total customer connections, which include wireline switched access lines, wireless customers, and wireline and wireless customers using broadband connections (EV-DO, DSL or FiOS) increased 5.7 percent to 105.3 million at the end of 2005. Verizon generated $22.0 billion in cash from operations, an increase of $192 million from 2004. Total debt was reduced by $300 million to $39.0 billion.

Mr. Seidenberg’s 2005 long-term incentive award was structured to align his total compensation opportunity with his industry peers and to place more of his total compensation “at risk”. Accordingly, in February 2005, Mr. Seidenberg received an award consisting of 314,480 performance stock units and 209,660 restricted stock units. During 2005, Mr. Seidenberg periodically reviewed with the Board the Corporation’s strategies for investment of capital to transform the company and the launch of Verizon Business following the closing of the MCI transaction, all of which are designed to create sustainable long term shareholder value. In recognition of the ongoing transformation of the Company’s business, Mr. Seidenberg and the Committee, in consultation with the HRC Consultant, reviewed the current market conditions and discussed the competitive assessment of the amount and terms of Mr. Seidenberg’s long-term incentive award. Mr. Seidenberg and the Committee agreed to restructure Mr. Seidenberg’s 2005 long-term incentive award by aligning the entire value of his 2005 award to performance stock units. As a result, on March 3, 2006, Mr. Seidenberg’s February 2005 RSU award was canceled and his 2005 long-term incentive opportunity consists of 314,480 performance stock units at their original February 2005 grant value of $11.34 million. The 2005 PSU grant dollar value is reported in column (f) of the Summary Compensation Table. This award represents Mr. Seidenberg’s target opportunity and will be based on the measures described on page 25. The actual payment will be determined by the Company’s relative performance over the performance cycle as previously described and shown in the table above. No performance stock units will be paid to Mr. Seidenberg unless Verizon’s relative TSR position meets a specific minimum threshold percentage at the conclusion of the award cycle. The value of Mr. Seidenberg’s award may increase or decrease based on Verizon’s relative TSR position compared to that of the Standard & Poor’s 500 companies and the companies in Verizon’s industry peer group as previously described. The value of each performance stock unit is equal to the fair market value of a share of Verizon’s common stock on the date of the grant and will change as the value of Verizon’s common stock changes over the award cycle.

In addition, the Committee restructured the grant to add certain strategic objectives related to the successful launch of Verizon Business, the new enterprise business created from the acquisition of MCI and the overall competitive financial and operational positioning of Verizon. To the extent that synergy targets relating to the launch of Verizon Business, key legislative initiatives, FiOS and broadband initiatives, and Wireless growth objectives are met or exceeded for the applicable performance period, the Committee may modify Mr. Seidenberg’s 2005 PSU payout level, but in no event shall Mr. Seidenberg’s 2005 PSU payout level exceed two times his target award value of $11.34 million. Conversely, Mr. Seidenberg will not be eligible for an award if minimum TSR targets are not achieved for the applicable performance period.

Mr. Seidenberg no longer accrues any benefits under the Verizon Income Deferral Plan (IDP). As discussed above, effective December 31, 2004, the Committee froze the IDP for all participants and ceased any additional benefit accruals under the IDP. Before 2005, the IDP provided Mr. Seidenberg a guaranteed annual supplemental retirement credit in an amount equal to 32% of his eligible pay. This retirement credit was replaced by a nonqualified pension plan that provides pension credits that range from 4%-7% on compensation that exceeds the IRS compensation limits. This is the same pay-credit percentage range received by all other management employees who participate in the Verizon Management Pension Plan and the nonqualified pension plan. Please see the discussion above and below for the 2006 changes to the pension benefits for Mr. Seidenberg and the other named executive officers.

STOCK OWNERSHIP GUIDELINES
The Company’s stock ownership guidelines reinforce each executive’s position as an owner of the business. The guidelines require each executive to maintain a significant ownership stake in the Company. The ownership levels are based on base salary and require a multiple of at least five times base salary for the CEO and a multiple of at least four times for the other named executive officers. These guidelines apply to all senior management employees. All named executive officers are currently in compliance with the stock ownership guidelines. The table on page 36 shows the current ownership levels of these named executive officers.

APPLICABLE TAX CODE PROVISION
Under the Omnibus Budget Reconciliation Act of 1993, provisions were added to the Internal Revenue Code under Section 162(m) that limits the tax deduction for compensation in excess of one million dollars paid to certain executive officers. Companies are not permitted to deduct that portion of an executive officer’s salary in excess of one million dollars but are permitted to exclude performance-based compensation from the limit if that compensation meets certain requirements. The Committee believes that the shareholder approved short- and long-term incentive plans provide for appropriate performance driven factors and therefore satisfy the requirements for exemption under Internal Revenue Code Section 162(m). However, under certain circumstances, the Committee exercises its discretion to make certain grants and awards that may not comply with the terms and conditions under Section 162(m) of the Internal Revenue Code in order to maintain the Committee’s flexibility to grant awards that will continue to attract, retain and properly motivate qualified executives. Accordingly, the Committee has from time to time approved elements of compensation for the named executive officers that are not fully deductible, when appropriate.

Respectfully submitted,

• Human Resources Committee
•  
• Walter V. Shipley, Chairperson
• Richard L. Carrión
• Robert W. Lane
• John R. Stafford

Dated: March 3, 2006